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Even if you never wish to trade currency crosses and prefer to stick to the majors, you can use crosses to aid in your forex trading selections. Currency crosses can reveal information about each major currency pair's relative strength.
Let's imagine you've done some research and checked the BabyPips.com economic calendar (shameless promotion! ), and you've discovered that the Japanese economy isn't doing so well at the moment.
By selling a currency with a lower interest rate compared to a currency with a higher interest rate, you can profit from the higher price as well as the interest rate difference (also known as the carry trade).
The U.S. dollar was known as a "vehicle cash" since the money was utilized as the mode of trade for worldwide exchanges. For instance, to change their U.K. sterling into Japanese yen, they would initially need to change over their sterling into U.S. dollars, and afterward convert these dollars into yen.
Nobody wants to be smacked by the "Smooth Retracement," yet it does happen from time to time.
As a trader, bear in your mind that we use divergence as an indicator, not as a signal to enter a trade, and there are too much false signals from the divergences so depending ok divergences only to trade would not be smart.
Divergence is a well-known concept in technical analysis that describes when the price is moving in the opposite direction of a technical indicator. Note that divergence is not a trading signal but rather an indicator.
While divergences are an excellent tool to have in your trading toolbox, there are situations when you may enter too soon since you did not wait for more confirmation.
What Is a Regular Divergence and How Do I Trade It?
Divergences can be used to indicate a probable trend reversal as well as a possible continuance of the trend (price continues to move in its current direction).
A regular divergence can be seen as a hint of a trend reversal. Bullish and bearish regular divergences are the two forms of regular divergences.
What if you were already in a long position and knew exactly when to quit, rather than watching your unrealized gains, such as a potential Aston Martin down payment or a pair of Christian Louboutin high heels, vanish before your eyes because your trade reversed direction?
Fractals are fractals, and Elliott Waves are fractals. Each wave can be divided into pieces, each of which is a near-identical duplicate of the whole. This trait is referred to as "self-similarity" by mathematicians.
When it comes to wave labeling, there are THREE cardinal "cannot-be-broken" laws. So, before you start using Elliott Wave Theory in your trading, you should familiarize yourself with the following guidelines. Failure to accurately categorize waves could lead to a devastating consequences on your balance.
How is Heikin Ashi calculated? Let's have a look at how Heikin Ashi candlesticks are calculated and displayed on a graph.
Range trading is an active investing strategy that identifies a range at which the investor buys and sells at over a short period.
The main classic chart patterns are mentioned here, along with when they are formed, what type of signal they provide, and what the next expected price move is.
Reversal patterns are chart formations that indicate that a current trend is poised to shift direction.
Pennants, like rectangles, are continuation chart patterns that form following big advances. Buyers and sellers often take a breather after a large upward or negative move before continuing to move the pair in the same direction.
When the price is bordered by parallel support and resistance levels, a rectangle is produced on the chart. A rectangle represents a moment of consolidation or hesitation between buyers and sellers as they trade punches but neither has the upper hand.